Wednesday, December 31, 2008

Apparently, in the rush to pass the bailout legislation, Congress (and Secretary Paulson and the SEC) failed to put meaningful disclosure requirements and a variety of banks contacted by the Associated Press either did not know, would not tell or would only reveal under anonymity what was done with monies provided them under the bailout legislation. A sample of responses: "We've lent some; we haven't lent the rest; we're not giving an accounting" (JP Morgan Chase); we're not providing dollar-in, dollar-out tracking" (SunTrust); "bailout money doesn't have its own bucket" (BB&T) and "we decline to comment on this without anonymity" (Morgan Stanley).

Several comments: [1] the old adage of "haste makes waste" was proved again; [2] the bank bailout may EASILY be the worst moment of the Bush Administration and a "ticking time-bomb" for leading Democratic legislators like Chris Dodd, Nancy Pelosi and Harry Reid as well as Republican Senators like Bob Bennett, [3] cities, states and universities which have gone through the rigor of a federal Single Audit have even more reason to feel aggrieved by that process when banks refuse even prefunctory disclosure on greater amounts of cash. I reluctantly supported the second bailout vote; I now wish that I had stood firm like Mike Pence and a number of other House Republicans. Nonetheless, I do not think (though I certainly oculd be wrong) that public and media pressure will permit banks to evade disclosure for long.